AMENDED IN SENATE JUNE 13, 2013

california legislature—2013–14 regular session

ASSEMBLY BILL No. 94

Introduced by Committee on Budget (Blumenfield (Chair), Bloom,Bonilla, Campos, Chesbro, Daly, Dickinson, Gordon,Jones-Sawyer, Mitchell, Mullin, Muratsuchi, Nazarian, Rendon,Skinner, Stone, and Ting)

January 10, 2013

An act relating to the Budget Act of 2013. An act to add Sections69515.5, 89762, 92493, 92494, 92495, 92495.5, and 92496 to, to addArticle 22 (commencing with Section 70020) to Chapter 2 of Part 42of Division 5 of, to add Article 10 (commencing with Section 89290)and Article 10.5 (commencing with Section 89295) to Chapter 2 of Part55 of Division 8 of, to add Article 7.5 (commencing with Section 92670)and Article 7.7 (commencing with Section 92675) to Chapter 6 of Part57 of Division 9 of, Title 3 of, the Education Code, and to add Section13313 to the Government Code, relating to education finance, andmaking an appropriation therefor, to take effect immediately, bill relatedto the budget.

legislative counsel’s digest

AB 94, as amended, Committee on Budget. Budget Act of 2013.Education finance: higher education.

(1)  Existing law establishes the Student Aid Commission as theprimary state agency for the administration of state-authorized studentfinancial aid programs available to students attending all segments ofpostsecondary education. Under existing law, the commission, amongother things, administers the Cal Grant Program, the StudentOpportunity and Access Program, the Assumption Program of Loans

Corrected 6-15-13—See last page. 98

for Education, the Graduate Assumption Program of Loans forEducation, the Public Interest Attorney Loan Repayment Program, andthe California State Work-Study Program. The commission also overseesthe state’s participation in the Federal Family Education Loan Program.

This bill would authorize the commission to enter into an agreementwith a public agency of a state other than California, or a private entityrelated to an agency of another state, to assist the other agency or entityin implementing financial aid programs, including assistance withprocessing grants, fellowships, and loans through the use of automatedinformation systems. The bill would create a Financial Aid TechnicalAssistance Fund, and would make moneys in the fund available to thecommission, upon appropriation by the Legislature, for purposes of thebill. The bill would require the commission to establish fees for servicesprovided under the bill, and would require that the fees be depositedin the fund. The bill would authorize the use of residual moneys in thefund for improvement of financial aid services for California. The billwould require the commission, beginning October 1, 2014, to submitan annual report, as prescribed, to the Department of Finance and theJoint Legislative Budget Committee detailing the total revenues collectedin the fund, by service provided and applicable fee collected, and theuse of the moneys in the fund.

(2)  Existing law provides for a public postsecondary education systemin this state. This system consists of the University of California, theCalifornia State University, and the California Community Colleges.Existing law authorizes these institutions to require that mandatorysystemwide fees and tuition, among other fees, be paid by students atthese institutions.

This bill would establish the Middle Class Scholarship Program underthe administration of the Student Aid Commission. The bill wouldprovide that, subject to an available and sufficient appropriation,commencing with the 2014–15 academic year, undergraduate studentsenrolled at the University of California or the California State Universitywould receive a scholarship award that, combined with other publiclyfunded student financial aid, as defined, received by an eligible student,would be up to 40% of the amount charged to that student for mandatorysystemwide tuition in that fiscal year if the student meets the followingconditions: has an annual household income that does not exceed$150,000; satisfies specified requirements for a Cal Grant award; is aresident of this state or exempt from paying nonresident tuition; filesspecified financial aid forms; makes timely application or applications

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for publicly funded student financial aid, as defined, for which he orshe is eligible; and maintains at least a 2.0 grade point average.

The bill would provide that a student whose annual household incomeexceeds $100,000, but does not exceed $150,000, and who otherwisemeets the program requirements, would receive a scholarship awardthat is reduced in accordance with prescribed calculations.

The bill would require, in order for students enrolled in theirrespective segments to remain eligible to receive financial aid underthe bill, that the University of California and the California StateUniversity maintain their respective institutional need-based grantprogram policies and maintain their funding amounts at a level that,at a minimum, is equal to the level maintained during the 2013–14academic year.

The bill would require the Student Aid Commission to annuallydetermine if the amounts appropriated under the bill in each fiscal yearare sufficient to cover the costs of the scholarships as projected to beawarded pursuant to the program. The bill would require, if thoseamounts are not sufficient for this purpose, that the scholarships bereduced proportionately by an equal percentage for all recipients ofscholarships under the bill.

The bill would establish the Middle Class Scholarship Fund, andwould specify amounts to be transferred, upon the order of the Directorof Finance, from the General Fund to the Middle Class ScholarshipFund for annual appropriation to the Student Aid Commission forallocation for purposes of the bill. The bill, beginning with the 2014–15fiscal year, would require the Department of Finance to include in theGovernor’s Budget proposal a fund condition statement for the MiddleClass Scholarship Fund for the fiscal year of the proposed budget andthe 2 immediately preceding fiscal years.

(3)  Existing law establishes the California State University, underthe administration of the Trustees of the California State University,as one of the segments of public postsecondary education in this state.

This bill would require the California State University to reportbiennially to the Legislature and the Department of Finance, beginningon or before October 1, 2014, and on or before October 1 of eacheven-numbered year through 2020, on the total costs of education atthe university on a systemwide and campus-by-campus basis, asspecified.

This bill, commencing with the 2013–14 academic year, would requirethe California State University to report, by March 1 of each year, on

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specified performance measures, including various calculations ofgraduation rates and amounts spent per degree, for the precedingacademic year.

This bill would require the contributions of the California StateUniversity to the Public Employees’ Retirement Fund to be based onpensionable compensation and the rates set forth in the annual BudgetAct and to be paid out of the total appropriation of the university in theannual Budget Act. The bill would specify that, beginning in the 2013–14fiscal year and each fiscal year thereafter, annual adjustments to theappropriation for the pension contributions of the California StateUniversity would be based on the university’s pensionable payroll forthe 2013–14 fiscal year, as identified by the Controller’s office.

This bill would authorize the Director of Finance to defer paymentof General Fund moneys, in a cumulative amount not to exceed$250,000,000 annually, appropriated to the California State Universityin the annual Budget Act, for payment in May or June of the same fiscalyear for which the original payment would have been made.

(4)  Existing law creates the University of California, administeredby the Regents of the University of California, as one of the segmentsof public postsecondary education in the state. The University ofCalifornia operates campuses at Berkeley, Davis, Irvine, Los Angeles,Merced, Riverside, San Diego, San Francisco, Santa Barbara, andSanta Cruz.

Existing law authorizes the University of California to issue revenuebonds, secured by a specified pledge of revenues.

This bill would authorize the University of California to pledge itsannual General Fund support appropriation, less certain amounts, tosecure the payment of its general revenue bonds or commercial paperassociated with the general revenue bond program. The bill wouldauthorize the university to fund debt service for capital expenditures,as defined, from its General Fund support appropriation, as specified.The bill would provide that these provisions do not require theLegislature to make an appropriation from the General Fund to theuniversity in any specific amount. The bill would also authorize theuniversity to fund pay-as-you-go capital outlay projects from its GeneralFund support appropriation, as specified.

This bill would require the University of California, if it is able toreduce annual debt service costs by refunding, defeasing, or retiringgeneral obligation bonds or State Public Works Board lease revenuebonds pursuant to these provisions, to annually contribute an equal

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amount to reduce the existing unfunded liability of the University ofCalifornia Retirement Plan.

This bill would require the University of California to report to theJoint Legislative Budget Committee and the Department of Finance ifit plans to use any of its support appropriation for capital outlay projectsin each fiscal year, as specified. The bill would require the committeeand the department to review the report by specified dates, and wouldauthorize the department to approve capital outlay projects pursuantto specified procedures. The bill would also require the university tosubmit a progress report by April 1 of each year to the committee andthe department detailing the scope and funding of each project.

The bill would require the university to manage its general revenuebond program so that not more than 15% of its General Fund supportappropriation, less a prescribed amount, is used for the total of thefollowing: debt service for specified capital expenditures, pay-as-you-gocapital outlay, and State Public Works Board rental payments.

This bill would require the University of California to reportbiennially to the Legislature and the Department of Finance, beginningon or before October 1, 2014, and on or before October 1 of eacheven-numbered year through 2020, on the total costs of education atthe university on a systemwide and campus-by-campus basis, asspecified.

This bill, commencing with the 2013–14 academic year, would requirethe University of California to report, by March 1 of each year, onspecified performance measures, including various calculations ofgraduation rates and amounts spent per degree, for the precedingacademic year.

This bill would appropriate $375,000 from the 1996 Higher EducationCapital Outlay Bond Fund to the University of California for thepurpose of funding the equipment phase of the Science and EngineeringBuilding at the Merced campus, as specified, during the 2013–14 fiscalyear, with the appropriation available for encumbrance until June 30,2016, subject to the enactment of a resolution by the Regents of theUniversity of California requiring the payment of prevailing wage ratesby the contractors and subcontractors working on this project, and allother capital outlay projects undertaken by the University of Californiathat are funded using nonstate funds or are otherwise not financed withthe funds appropriated for this project, during the 2013–14 fiscal year.

This bill would require the University of California to allocate andencumber from a specified appropriation the amount necessary to pay

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in full all amounts that are reasonably anticipated to become due andpayable during the 2013–14 fiscal year for lease revenue and generalobligation bond debt service. The bill would require the Controller totransfer funds from the specified appropriation in accordance withspecified schedules.

This bill would allocate $15,000,000 from a specified appropriationin the Budget Act of 2013 to the Regents of the University of Californiafor the School of Medicine at the University of California, Riverside,for specified purposes.

The bill would require, on or before April 1 of each year, theUniversity of California to provide progress reports and specifiedinformation consistent with the published mission and vision of theUniversity of California, Riverside, School of Medicine to the relevantpolicy and fiscal committees of the Legislature pertaining to funding,recruitment, hiring, and outcomes for the University of California,Riverside, School of Medicine.

The bill would declare that the absence of language in the BudgetAct of 2013 specifying that the University of California and the HastingsCollege of the Law shall use budgeted funds for retirement costs is notan indication of legislative support for, or acceptance of, increasedretirement costs being paid for by employees of the University ofCalifornia and the Hastings College of the Law.

(5)  This bill would declare that it is to take effect immediately as abill providing for appropriations related to the Budget Bill.

This bill would express the intent of the Legislature to enact statutorychanges relating to the Budget Act of 2013.

Vote: majority. Appropriation: no yes. Fiscal committee: no

yes. State-mandated local program: no.

The people of the State of California do enact as follows:

line 1 SECTION 1. Section 69515.5 is added to the Education Code, line 2 to read: line 3 69515.5. (a)  The commission may enter into an agreement line 4 with a public agency of a state other than California, or a private line 5 entity related to an agency of another state, to assist the other line 6 agency or entity in implementing student financial aid programs, line 7 including providing assistance with processing grants, fellowships, line 8 and loans through the use of automated information systems. The line 9 commission may receive payment, reimbursement, or other

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line 1 resources as consideration for services provided pursuant to line 2 agreements entered into under this section. line 3 (b)  The commission shall establish fees for services it provides line 4 pursuant to this section in order to recover, at a minimum, the full line 5 costs of providing those services, including all direct and indirect line 6 costs. line 7 (c)  The Financial Aid Technical Assistance Fund is hereby line 8 created in the State Treasury, and moneys in the fund shall be line 9 available, upon appropriation by the Legislature to the commission,

line 10 for the direct and indirect costs of providing assistance to agencies line 11 and entities of other states with implementation of Dream Act line 12 programs and to improve financial aid services for California. line 13 The commission shall deposit the proceeds of the fees established line 14 under this section into the fund. Only the moneys received for line 15 purposes of this section shall be deposited into the fund. The fund line 16 shall be credited with all of the investment income earned by the line 17 moneys deposited in the fund. Moneys in the fund are not part of line 18 the General Fund as defined in Section 16300 of the Government line 19 Code. line 20 (d)  The commission shall use moneys deposited in the fund for line 21 all costs associated with providing technical assistance to agencies line 22 of states other than California, and related private entities, line 23 pursuant to this section, and moneys remaining in the fund after line 24 those costs are retired shall be used to improve student financial line 25 aid services for California. Prior to the expenditure of these line 26 residual funds, the commission shall submit a detailed expenditure line 27 plan for approval by the Department of Finance as part of the line 28 annual budget process. line 29 (e)  Beginning October 1, 2014, the commission shall submit an line 30 annual report to the Department of Finance and the Joint line 31 Legislative Budget Committee detailing the total revenues collected line 32 in the fund, by service provided and applicable fee collected, and line 33 the use of the moneys in the fund. line 34 SEC. 2. Article 22 (commencing with Section 70020) is added line 35 to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education line 36 Code, to read:

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line 1 Article 22. Middle Class Scholarship Program line 2 line 3 70020. The Middle Class Scholarship Fund is hereby line 4 established in the State Treasury. Moneys in the fund shall be line 5 allocated, in accordance with this article, to make higher education line 6 more affordable. line 7 70021. The Middle Class Scholarship Program is hereby line 8 established under the administration of the Student Aid line 9 Commission. For purposes of this article, “commission” means

line 10 the Student Aid Commission. line 11 70022. (a)  (1) Subject to an available and sufficient line 12 appropriation, commencing with the 2014–15 academic year, an line 13 undergraduate student enrolled in the California State University line 14 or the University of California who meets the requirements of line 15 paragraph (2) is eligible for a scholarship award as described in line 16 that paragraph. line 17 (2)  Each academic year, except as provided in paragraphs (3) line 18 and (4), a student shall receive a scholarship award in an amount line 19 that, combined with other publicly funded student financial aid line 20 received by an eligible student, is up to 40 percent of the amount line 21 charged to that student in that academic year for mandatory line 22 systemwide tuition, if all of the following requirements are met: line 23 (A)  The student’s annual household income does not exceed line 24 one hundred fifty thousand dollars ($150,000). For purposes of line 25 this article, annual household income shall be calculated in a line 26 manner that is consistent with the requirements applicable to the line 27 Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Program line 28 (Chapter 1.7 (commencing with Section 69430)) and Section 69506. line 29 (B)  The student satisfies the eligibility requirements for a Cal line 30 Grant award pursuant to Section 69433.9, except that a student line 31 who is exempt from nonresident tuition under Section 68130.5 line 32 shall not be required to satisfy the requirements of subdivision (a) line 33 of Section 69433.9. line 34 (C)  The student is exempt from paying nonresident tuition. line 35 (D)  The student completes and submits a Free Application for line 36 Federal Student Aid (FAFSA) application. If the student is not able line 37 to complete a FAFSA application, the student submits an line 38 application determined by the commission to be equivalent to the line 39 FAFSA application for purposes of this article.

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line 1 (E)  The student makes a timely application or applications for line 2 publicly funded student financial aid from programs for which he line 3 or she is eligible, other than the program established by this article. line 4 For purposes of this article, “publicly funded student financial line 5 aid” shall be defined as the federal Pell Grant Program, the Cal line 6 Grant Program, and institutional need-based grants. line 7 (F)  The student maintains at least a 2.0 grade point average in line 8 a manner that is consistent with the requirements applicable to line 9 the Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Program

line 10 (Chapter 1.7 (commencing with Section 69430)). line 11 (3)  The scholarship award under this article to a student whose line 12 annual household income is greater than one hundred thousand line 13 dollars ($100,000), and who otherwise meets the requirements of line 14 paragraph (2), shall be reduced by 0.6-percent increments, from line 15 a maximum 40 percent of mandatory systemwide tuition for an line 16 academic year to a minimum 10 percent of mandatory systemwide line 17 tuition for an academic year, per one thousand dollars ($1,000) line 18 of annual household income in excess of one hundred thousand line 19 dollars ($100,000), provided that no scholarship award shall be line 20 provided to a student with an annual household income of one line 21 hundred fifty thousand dollars ($150,000) or more. This reduction line 22 shall be in addition to any reduction required by subdivision (e) line 23 of Section 70023. line 24 (4)  For the 2014–15, 2015–16, and 2016–17 academic years, line 25 the maximum amount of a student’s scholarship award shall be line 26 35 percent, 50 percent, and 75 percent, respectively, of the total line 27 scholarship award amount that the student would otherwise be line 28 eligible to receive. line 29 (b)  In order for students enrolled in their respective segments line 30 to remain eligible to receive a scholarship under this article, the line 31 University of California and the California State University shall line 32 maintain their respective institutional need-based grant program line 33 policies, and shall maintain their funding amounts at a level that, line 34 at a minimum, is equal to the level maintained during the 2013–14 line 35 academic year. line 36 (c)  The University of California and the California State line 37 University shall report on the implementation of this article as line 38 part of the report made pursuant to Section 66021.1. line 39 70023. (a)  For each academic year, the commission shall line 40 determine an amount sufficient, when combined with Cal Grants,

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line 1 Pell Grants, and institutional need-based grants received by line 2 eligible students from other sources, to provide scholarships to line 3 eligible students in the amounts described in paragraphs (2) and line 4 (3) of subdivision (a) of Section 70022. The University of California line 5 and the California State University shall provide the commission line 6 with any financial aid data that are necessary for the determination line 7 of these amounts. line 8 (b)  The commission shall annually determine if the amounts line 9 appropriated under this section in each fiscal year are sufficient

line 10 to cover the costs of the scholarships as projected to be awarded line 11 pursuant to the program. If those amounts are not sufficient for line 12 this purpose, the scholarships shall be reduced proportionately line 13 by an equal percentage for all recipients of scholarships under line 14 this article. line 15 (c)  The commission may adopt regulations necessary to carry line 16 out the purposes of this article under subdivision (b) as emergency line 17 regulations in accordance with Chapter 3.5 (commencing with line 18 Section 11340) of Part 1 of Division 3 of Title 2 of the Government line 19 Code. For purposes of the Administrative Procedure Act, including line 20 Section 11349.6 of the Government Code, the adoption of those line 21 regulations shall be deemed to be an emergency and necessary line 22 for the immediate preservation of the public peace, health and line 23 safety, or general welfare, notwithstanding subdivision (e) of line 24 Section 11346.1 of the Government Code. Notwithstanding line 25 subdivision (e) of Section 11346.1 of the Government Code, any line 26 regulation adopted pursuant to this section shall not remain in line 27 effect more than 180 days unless the commission complies with line 28 all provisions of Chapter 3.5 (commencing with Section 11340) line 29 of Part 1 of Division 3 of Title 2 of the Government Code, as line 30 required by subdivision (e) of Section 11346.1 of the Government line 31 Code. line 32 (d)  The unencumbered balance, as of June 30 of each fiscal line 33 year, of the amount appropriated from the Middle Class line 34 Scholarship Fund pursuant to paragraph (1) of subdivision (e) line 35 shall revert to the General Fund. line 36 (e)  (1)  Upon order of the Director of Finance, the following line 37 amounts shall be transferred from the General Fund to the Middle line 38 Class Scholarship Fund, and are hereby appropriated to the line 39 commission for allocation pursuant to this article:

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line 1 (A)  For the 2014–15 fiscal year, one hundred seven million line 2 dollars ($107,000,000). line 3 (B)  For the 2015–16 fiscal year, one hundred fifty-two million line 4 dollars ($152,000,000). line 5 (C)  For the 2016–17 fiscal year, two hundred twenty-eight line 6 million dollars ($228,000,000). line 7 (D)  For the 2017–18 fiscal year and for each fiscal year line 8 thereafter, three hundred five million dollars ($305,000,000). line 9 (2)  An annual appropriation to the commission is hereby

line 10 established in the amounts and for the fiscal years described in line 11 paragraph (1) to carry out the purposes of this section and Section line 12 70022. line 13 (3)  The funds transferred and appropriated pursuant to line 14 paragraph (1) shall only be available for encumbrance in the fiscal line 15 year in which they are transferred, and the General Fund shall line 16 have no liability or any obligation beyond the transfers explicitly line 17 authorized in paragraph (1) unless a subsequent transfer or line 18 allocation is required pursuant to statute. line 19 (4)   In any fiscal year, additional appropriations may be enacted line 20 pursuant to statute to carry out the purposes of this article. line 21 (5)  (A)  Beginning with the Governor’s Budget proposal for the line 22 2014–15 fiscal year, and in the Governor’s Budget for each fiscal line 23 year thereafter, the Department of Finance shall include a fund line 24 condition statement for the Middle Class Scholarship Fund for the line 25 fiscal year of the proposed budget and the two immediately line 26 preceding fiscal years prepared in accordance with existing law. line 27 (B)  Upon order of the Director of Finance and commencing line 28 with the 2013–14 fiscal year, if the May Revision projects a budget line 29 deficit for the next fiscal year, the amount specified in paragraph line 30 (1) for the fiscal year for which the budget deficit is projected may line 31 be reduced by up to 33 percent. Upon order of the Director of line 32 Finance, beginning with the 2016–17 fiscal year, and each year line 33 thereafter, if the May Revision projects a deficit for the next fiscal line 34 year, the amount specified in paragraph (1) may be reduced to an line 35 amount greater than or equal to two hundred million dollars line 36 ($200,000,000). line 37 (f)  Subject to an appropriation in the annual Budget Act for its line 38 purposes, the commission may begin implementation of, and line 39 establish outreach services relating to, this article.

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line 1 SEC. 3. Article 10 (commencing with Section 89290) is added line 2 to Chapter 2 of Part 55 of Division 8 of Title 3 of the Education line 3 Code, to read: line 4 line 5 Article 10. Expenditures for Undergraduate and Graduate line 6 Instruction and Research Activities line 7 line 8 89290. (a)  The California State University shall report line 9 biennially to the Legislature and the Department of Finance, on

line 10 or before October 1, 2014, and on or before October 1 of each line 11 even-numbered year thereafter, on the total costs of education at line 12 the California State University. line 13 (b)  The report prepared under this section shall identify the line 14 costs of undergraduate education, graduate academic education, line 15 graduate professional education, and research activities. All four line 16 categories listed in this subdivision shall be reported in total and line 17 disaggregated separately by health sciences disciplines, disciplines line 18 included in paragraph (10) of subdivision (b) of Section 89295, line 19 and all other disciplines. The university shall also separately report line 20 on the cost of education for postbaccaulaureate teacher education line 21 programs. For purposes of this report, research for which a student line 22 earns credit toward his or her degree program shall be identified line 23 as undergraduate education or graduate education, as appropriate. line 24 (c)  The costs shall also be reported by fund source, including line 25 all of the following: line 26 (1)  State General Fund. line 27 (2)  Systemwide tuition and fees. line 28 (3)  Nonresident tuition and fees and other student fees. line 29 (d)  For any report submitted under this section before January line 30 1, 2017, the costs shall, at a minimum, be reported on a systemwide line 31 basis. For any report submitted under this section on or after line 32 January 1, 2017, the costs shall be reported on both a systemwide line 33 and campus-by-campus basis. line 34 (e)  A report to be submitted pursuant to this section shall be line 35 submitted in compliance with Section 9795 of the Government line 36 Code. line 37 (f)  Pursuant to Section 10231.5 of the Government Code, the line 38 requirement for submitting a report under this section shall be line 39 inoperative on January 1, 2021, pursuant to Section 10231.5 of line 40 the Government Code.

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line 1 SEC. 4. Article 10.5 (commencing with Section 89295) is added line 2 to Chapter 2 of Part 55 of Division 8 of Title 3 of the Education line 3 Code, to read: line 4 line 5 Article 10.5. Reporting of Performance Measures line 6 line 7 89295. (a)  For purposes of this section, the following terms line 8 are defined as follows: line 9 (1)  The “four-year graduation rate” means the percentage of

line 10 a cohort that entered the university as freshmen that successfully line 11 graduated within four years. line 12 (2)  The “six-year graduation rate” means the percentage of a line 13 cohort that entered the university as freshmen that successfully line 14 graduated within six years. line 15 (3)  The “two-year transfer graduation rate” means the line 16 percentage of a cohort that entered the university as junior-level line 17 transfer students from the California Community Colleges that line 18 successfully graduated within two years. line 19 (4)  The “three-year transfer graduation rate” means the line 20 percentage of a cohort that entered the university as junior-level line 21 transfer students from the California Community Colleges that line 22 successfully graduated within three years. line 23 (5)  “Low-income students” means students who receive a Pell line 24 Grant at any time during their matriculation at the institution. line 25 (b)  Commencing with the 2013–14 academic year, the California line 26 State University shall report, by March 1 of each year, on the line 27 following performance measures for the preceding academic year, line 28 to inform budget and policy decisions and promote the effective line 29 and efficient use of available resources: line 30 (1)  The number of transfer students enrolled annually from the line 31 California Community Colleges, and the percentage of transfer line 32 students as a proportion of the total undergraduate student line 33 population. line 34 (2)  The number of low-income students enrolled annually and line 35 the percentage of low-income students as a proportion of the total line 36 student population. line 37 (3)  The systemwide four-year and six-year graduation rates for line 38 each cohort of students and, separately, for low-income students.

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line 1 (4)  The systemwide two-year and three-year transfer graduation line 2 rates for each cohort of students and, separately, for each cohort line 3 of low-income students. line 4 (5)  The number of degree completions annually, in total and line 5 for the following categories: line 6 (A)  Freshman entrants. line 7 (B)  Transfer students. line 8 (C)  Graduate students. line 9 (D)  Low-income students.

line 10 (6)  The percentage of first-year undergraduates who have line 11 earned sufficient course credits by the end of their first year of line 12 enrollment to indicate they will complete a degree in four years. line 13 (7)  For all students, the total amount of funds received from all line 14 sources identified in subdivision (c) of Section 89290 for the year, line 15 divided by the number of degrees awarded that same year. line 16 (8)  For undergraduate students, the total amount of funds line 17 received from all sources identified in subdivision (c) of Section line 18 89290 for the year expended for undergraduate education, divided line 19 by the number of undergraduate degrees awarded that same year. line 20 (9)  The average number of course credits accumulated by line 21 students at the time they complete their degrees, disaggregated by line 22 freshman entrants and transfers. line 23 (10)  (A)  The number of degree completions in science, line 24 technology, engineering, and mathematics (STEM) fields, line 25 disaggregated by undergraduate students, graduate students, and line 26 low-income students. line 27 (B)  For purposes of subparagraph (A), “STEM fields” include, line 28 but are not necessarily limited to, all of the following: computer line 29 and information sciences, engineering and engineering line 30 technologies, biological and biomedical sciences, mathematics line 31 and statistics, physical sciences, and science technologies. line 32 SEC. 5. Section 89762 is added to the Education Code, to read: line 33 89762. (a)  The contributions of the California State University line 34 to the Public Employees’ Retirement Fund, as provided by Section line 35 20822 of the Government Code, shall be based on pensionable line 36 compensation and the rates set forth in the Budget Act, and shall line 37 be paid out of the California State University total appropriation line 38 in the annual Budget Act. line 39 (b)  Beginning in the 2013–14 fiscal year and each fiscal year line 40 thereafter, annual adjustments to the budget allocation for

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line 1 California State University pension contributions shall be based line 2 on the university’s actual 2013–14 fiscal year pensionable payroll, line 3 as identified by the Controller’s office, by funding source and state line 4 member categories, and the incremental change in the rates set line 5 forth in the annual Budget Act. line 6 (c)  Budget adjustments under this section shall not be made for line 7 subsequent changes in payroll. line 8 (d)  Pension funding for the university shall be identified line 9 annually in the Budget Act.

line 10 SEC. 6. Section 92493 is added to the Education Code, to read: line 11 92493. (a)  The University of California may pledge, along line 12 with its other revenues, its annual General Fund support line 13 appropriation less the amount of that appropriation that is required line 14 to fund general obligation bond payments and the State Public line 15 Works Board rental payments, to secure the payment of any of the line 16 university’s general revenue bonds or commercial paper associated line 17 with the general revenue bond program. To the extent the university line 18 pledges any part of its support appropriation as a source of line 19 revenue securing any obligation, it shall provide that this line 20 commitment of revenue is subject to annual appropriation by the line 21 Legislature. The university may fund debt service for capital line 22 expenditures defined in subdivision (b) from its General Fund line 23 support appropriation pursuant to Sections 92495 and 92495.5. line 24 The state hereby covenants with the holders of the university’s line 25 obligations secured by the pledge of the university permitted by line 26 this section that, so long as any of the obligations referred to in line 27 this subdivision remain outstanding, the state will not impair or line 28 restrict the ability of the university to pledge any support line 29 appropriation or support appropriations that may be enacted for line 30 the university. The university may include this covenant of the state line 31 in the agreements or other documents underlying the university’s line 32 obligations to this effect. line 33 (b)  For purposes of this section, “capital expenditures” shall line 34 mean (1) the costs to design, construct, or equip academic facilities line 35 to address seismic and life safety needs, enrollment growth, or line 36 modernization of out-of-date facilities, and renewal or expansion line 37 of infrastructure to serve academic programs, or (2) the debt line 38 service amount associated with refunding, defeasing, or retiring line 39 State Public Works Board lease revenue bonds.

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line 1 (c)  Nothing in this section shall require the Legislature to make line 2 an appropriation from the General Fund in any specific amount line 3 to support the University of California. line 4 (d)  The ability to utilize its support appropriation as stated in line 5 this section shall not be used as a justification for future increases line 6 in student tuition, additional employee layoffs, or reductions in line 7 employee compensation at the University of California. line 8 SEC. 7. Section 92494 is added to the Education Code, to read: line 9 92494. (a)  The University of California may fund

line 10 pay-as-you-go capital outlay projects from its General Fund line 11 support appropriation pursuant to Sections 92495 and 92495.5. line 12 (b)  For purposes of this section, “capital outlay project” shall line 13 mean the costs to design, construct, or equip academic facilities line 14 to address seismic and life safety needs, enrollment growth, or line 15 modernization of out-of-date facilities, and renewal or expansion line 16 of infrastructure to serve academic programs. line 17 SEC. 8. Section 92495 is added to the Education Code, to read: line 18 92495. (a)  Commencing with the 2013–14 fiscal year and for line 19 each fiscal year thereafter, if the University of California plans to line 20 use any of its support appropriation in the annual budget for the line 21 subsequent fiscal year for capital expenditures pursuant to Section line 22 92493, as defined in paragraph (1) of subdivision (b) of that line 23 section, or for capital outlay projects pursuant to Section 92494, line 24 it shall simultaneously submit, on or before September 1 nine line 25 months before the commencement of that fiscal year, a report to line 26 the Joint Legislative Budget Committee and the Department of line 27 Finance. This report shall detail the scope of each capital outlay line 28 project or expenditure and how it will be funded, and it shall line 29 provide the same level of detail as a capital outlay budget change line 30 proposal. The Department of Finance shall review the report and line 31 submit a list of preliminarily approved projects to the Joint line 32 Legislative Budget Committee by February 1. The Department of line 33 Finance shall submit a final list of approved projects to the line 34 University of California no earlier than April 1, three months line 35 before the commencement of the fiscal year of the planned line 36 expenditures. The University of California shall not proceed with line 37 any capital expenditures pursuant to Section 92493, as defined in line 38 paragraph (1) of subdivision (b) of that section, or capital outlay line 39 projects pursuant to Section 92494, prior to receiving approval line 40 from the Department of Finance pursuant to this subdivision.

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line 1 (b)  For the 2013–14 fiscal year only, if the University of line 2 California plans to use any of its support appropriation in the line 3 annual budget for the 2013–14 fiscal year for capital expenditures line 4 pursuant to Section 92493, as defined in paragraph (1) of line 5 subdivision (b) of that section, or for capital outlay projects line 6 pursuant to Section 92494, it shall simultaneously submit, on or line 7 before August 1 of that fiscal year, a report to the Joint Legislative line 8 Budget Committee and the Department of Finance. This report line 9 shall detail the scope of each capital outlay project or expenditure

line 10 and how it will be funded, and it shall provide the same level of line 11 detail as a capital outlay budget change proposal. The Department line 12 of Finance shall review the report and submit a list of preliminarily line 13 approved projects to the Joint Legislative Budget Committee by line 14 November 1 of that fiscal year. The Department of Finance shall line 15 submit a final list of approved projects to the University of line 16 California no earlier than December 1 of that fiscal year. The line 17 University of California shall not proceed with any capital line 18 expenditures pursuant to Section 92493, as defined in paragraph line 19 (1) of subdivision (b) of that section, or capital outlay projects line 20 pursuant to Section 92494, prior to receiving approval from the line 21 Department of Finance pursuant to this subdivision. line 22 (c)  Notwithstanding subdivision (b), the University of California line 23 may use the authority provided in Section 92493 for the Merced line 24 Classroom and Academic Office Building, as specified in Provision line 25 3 of Item 6440-001-0001 of Section 2.00 of the Budget Act of 2013. line 26 (d)  Notwithstanding Section 10231.5 of the Government Code, line 27 commencing with the 2014–15 fiscal year, on or before February line 28 1 of each fiscal year, the University of California shall line 29 simultaneously submit a progress report to the Joint Legislative line 30 Budget Committee and the Department of Finance detailing the line 31 scope, funding, and current status of each capital expenditure line 32 undertaken pursuant to Section 92493, as defined in paragraph line 33 (1) of subdivision (b) of that section, and for each capital outlay line 34 project undertaken pursuant to Section 92494. line 35 SEC. 9. Section 92495.5 is added to the Education Code, to line 36 read: line 37 92495.5. The university shall manage its general revenue bond line 38 program in a manner so that not more than 15 percent of its line 39 General Fund support appropriation, less the amount of that line 40 appropriation that is required to fund general obligation bond

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line 1 payments and State Public Works Board rental payments, is used line 2 for the total of all of the following: line 3 (a)  Debt service for capital expenditures pursuant to Section line 4 92493. line 5 (b)  Pay-as-you-go capital outlay pursuant to Section 92494. line 6 (c)  State Public Works Board rental payments. line 7 SEC. 10. Section 92496 is added to the Education Code, to line 8 read: line 9 92496. If the university is able to reduce annual debt service

line 10 costs by refunding, defeasing, or retiring general obligation bonds line 11 or State Public Works Board lease revenue bonds, as described line 12 in Section 92493, the university shall annually contribute an equal line 13 amount to reduce the existing unfunded liability of the University line 14 of California Retirement Plan. line 15 SEC. 11. Article 7.5 (commencing with Section 92670) is added line 16 to Chapter 6 of Part 57 of Division 9 of Title 3 of the Education line 17 Code, to read: line 18 line 19 Article 7.5. Expenditures for Undergraduate and Graduate line 20 Instruction and Research Activities line 21 line 22 92670. (a)  The University of California shall report biennially line 23 to the Legislature and the Department of Finance, on or before line 24 October 1, 2014, and on or before October 1 of each line 25 even-numbered year thereafter, on the total costs of education at line 26 the University of California. line 27 (b)  The report shall identify the costs of undergraduate line 28 education, graduate academic education, graduate professional line 29 education, and research activities. All four categories listed in this line 30 subdivision shall be reported in total and disaggregated separately line 31 by health sciences disciplines, disciplines included in paragraph line 32 (10) of subdivision (b) of Section 92675, and all other disciplines. line 33 For purposes of this report, research for which a student earns line 34 credit toward his or her degree program shall be identified as line 35 undergraduate education or graduate education. line 36 (c)  The costs shall also be reported by fund source, including line 37 all of the following: line 38 (1)  State General Fund. line 39 (2)  Systemwide tuition and fees. line 40 (3)  Nonresident tuition and fees and other student fees.

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line 1 (4)  University of California General Funds, including interest line 2 on General Fund balances and the portion of indirect cost recovery line 3 and patent royalty income used for core educational purposes. line 4 (d)  For any report submitted under this section before January line 5 1, 2017, the costs shall, at a minimum, be reported on a systemwide line 6 basis. For any report submitted under this section on or after line 7 January 1, 2017, the costs shall be reported on both a systemwide line 8 and campus-by-campus basis. line 9 (e)  A report to be submitted pursuant to this section shall be

line 10 submitted in compliance with Section 9795 of the Government line 11 Code. line 12 (f)  Pursuant to Section 10231.5 of the Government Code, the line 13 requirement for submitting a report under this section shall be line 14 inoperative on January 1, 2021, pursuant to Section 10231.5 of line 15 the Government Code. line 16 SEC. 12. Article 7.7 (commencing with Section 92675) is added line 17 to Chapter 6 of Part 57 of Division 9 of Title 3 of the Education line 18 Code, to read: line 19 line 20 Article 7.7. Reporting of Performance Measures line 21 line 22 92675. (a)  For purposes of this section, the following terms line 23 are defined as follows: line 24 (1)  The “four-year graduation rate” means the percentage of line 25 a cohort that entered the university as freshmen that successfully line 26 graduated within four years. line 27 (2)  The “two-year transfer graduation rate” means the line 28 percentage of a cohort that entered the university as junior-level line 29 transfer students from the California Community Colleges that line 30 successfully graduated within two years. line 31 (3)  “Low-income students” means students who receive a Pell line 32 Grant at any time during their matriculation at the institution. line 33 (b)  Commencing with the 2013–14 academic year, the University line 34 of California shall report, by March 1 of each year, on the line 35 following performance measures for the preceding academic year, line 36 to inform budget and policy decisions and promote the effective line 37 and efficient use of available resources: line 38 (1)  The number of transfer students enrolled annually from the line 39 California Community Colleges, and the percentage of transfer

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line 1 students as a proportion of the total undergraduate student line 2 population. line 3 (2)  The number of low-income students enrolled annually and line 4 the percentage of low-income students as a proportion of the total line 5 student population. line 6 (3)  The systemwide four-year graduation rates for each cohort line 7 of students and, separately, for each cohort of low-income students. line 8 (4)  The systemwide two-year transfer graduation rates for each line 9 cohort of students and, separately, for each cohort of low-income

line 10 students. line 11 (5)  The number of degree completions annually, in total and line 12 for the following categories: line 13 (A)  Freshman entrants. line 14 (B)  Transfer students. line 15 (C)  Graduate students. line 16 (D)  Low-income students. line 17 (6)  The percentage of first-year undergraduates who have line 18 earned sufficient course credits by the end of their first year of line 19 enrollment to indicate they will complete a degree in four years. line 20 (7)  For all students, the total amount of funds received from all line 21 sources identified in subdivision (c) of Section 92670 for the year, line 22 divided by the number of degrees awarded that same year. line 23 (8)  For undergraduate students, the total amount of funds line 24 received from the sources identified in subdivision (c) of Section line 25 92670 for the year expended for undergraduate education, divided line 26 by the number of undergraduate degrees awarded that same year. line 27 (9)  The average number of course credits accumulated by line 28 students at the time they complete their degrees, disaggregated by line 29 freshman entrants and transfers. line 30 (10)  (A)  The number of degree completions in science, line 31 technology, engineering, and mathematics (STEM) fields, line 32 disaggregated by undergraduate students, graduate students, and line 33 low-income students. line 34 (B)  For purposes of subparagraph (A), “STEM fields” include, line 35 but are not necessarily limited to, all of the following: computer line 36 and information sciences, engineering and engineering line 37 technologies, biological and biomedical sciences, mathematics line 38 and statistics, physical sciences, and science technologies. line 39 SEC. 13. Section 13313 is added to the Government Code, to line 40 read:

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line 1 13313. (a)  Notwithstanding any other law, in order to achieve line 2 effective cash management of state resources, the Director of line 3 Finance may defer payment of General Fund moneys, in a line 4 cumulative amount not to exceed two hundred fifty million dollars line 5 ($250,000,000) annually, appropriated to the California State line 6 University in the annual Budget Act. line 7 (b)  The payment of the amount deferred shall be in May or June, line 8 as established by the Director of Finance, of the same fiscal year line 9 that the original payment would have been made.

line 10 SEC. 14. (a)  Three hundred seventy-five thousand dollars line 11 ($375,000) is hereby appropriated from the 1996 Higher Education line 12 Capital Outlay Bond Fund to the University of California for the line 13 purpose of funding the Merced Campus (1) 99.11.050-Science and line 14 Engineering Building 2—Equipment phase during the 2013–14 line 15 fiscal year, with this appropriation to be available for encumbrance line 16 until June 30, 2016, if the requirements of subdivision (b) are met. line 17 (b)  The funds appropriated under subdivision (a) shall only be line 18 available for expenditure if the Regents of University of California line 19 act, by resolution, to require the payment of prevailing wage rates line 20 by the contractors and subcontractors working on this project, line 21 and all other capital outlay projects undertaken by the University line 22 of California that are funded using nonstate funds or are otherwise line 23 not financed with the funds appropriated for this project, during line 24 the 2013–14 fiscal year. line 25 SEC. 15. (a)  The University of California shall allocate and line 26 encumber from the appropriation made pursuant to Item line 27 6440-001-0001 of Section 2.00 of the Budget Act of 2013 the line 28 amount necessary to pay in full all amounts that are reasonably line 29 anticipated to become due and payable during the fiscal year for line 30 lease revenue and general obligation bond debt service. line 31 (b)  Notwithstanding Section 16326 of the Government Code, line 32 the Controller shall transfer funds appropriated pursuant to Item line 33 6440-001-0001 of Section 2.00 of the Budget Act of 2013 in line 34 accordance with schedules to be submitted as follows: line 35 (1)  The State Public Works Board shall submit a schedule or line 36 schedules for rental, fees, and insurance associated with its lease line 37 revenue bonds issued on behalf of the University of California. line 38 Notwithstanding the payment dates in any related facility lease or line 39 indenture, a schedule may provide for an earlier transfer of funds

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line 1 to ensure debt requirements are met and base rental payments are line 2 paid in full when due. line 3 (2)  (A)  The Department of Finance shall submit a schedule or line 4 schedules to reimburse the General Fund in an amount equal to line 5 the required general obligation bond debt service costs attributed line 6 to the University of California. Notwithstanding the payment dates line 7 in any related debt service schedule for a bond issuance, a schedule line 8 submitted by the Department of Finance may provide for an earlier line 9 transfer of funds to ensure debt requirements are paid in full when

line 10 due. line 11 (B)  The Department of Finance shall submit a revised schedule line 12 of reimbursements, as needed, to authorize the return of any funds line 13 to Item 6440-001-0001 of Section 2.00 of the Budget Act of 2013 line 14 that were previously transferred pursuant to this act and that are line 15 not needed to fully reimburse debt service costs in the 2013–14 line 16 fiscal year. Any funds returned pursuant to this subparagraph may line 17 be carried over and expended in the 2014–15 fiscal year. line 18 SEC. 16. (a)  Of the moneys appropriated in Item line 19 6440–001–0001 of Section 2.00 of the Budget Act of 2013, the sum line 20 of fifteen million dollars ($15,000,000) is allocated to the Regents line 21 of the University of California for the School of Medicine at the line 22 University of California, Riverside. line 23 (b)  Funds provided pursuant to subdivision (a) shall be available line 24 for planning and startup costs associated with academic programs line 25 to be offered by the School of Medicine at the University of line 26 California, Riverside, including all of the following: line 27 (1)  Academic planning activities, support of academic program line 28 offerings, and faculty recruitment. line 29 (2)  The acquisition of instructional materials and equipment. line 30 (3)  Ongoing operating support for faculty, staff, and other line 31 annual operating expenses for the School of Medicine at the line 32 University of California, Riverside. line 33 (c)  The additional funds provided by this section for the School line 34 of Medicine at the University of California, Riverside, shall only line 35 be used for the purposes specified in subdivision (b), and shall not line 36 be redirected or otherwise expended, nor shall these funds be used line 37 to supplant other funding of that school. line 38 (d)  On or before April 1 of each year, the University of line 39 California shall provide progress reports to the relevant policy line 40 and fiscal committees of the Legislature pertaining to funding,

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line 1 recruitment, hiring, and outcomes for the School of Medicine at line 2 the University of California, Riverside. Specifically, the report line 3 shall include, but not be limited to, information consistent with line 4 the published mission and vision for the School of Medicine at the line 5 University of California, Riverside, in all of the following areas: line 6 (1)  The number of students who have applied, been admitted, line 7 or been enrolled, broken out by race, ethnicity, and gender. line 8 (2)  The number of full-time faculty, part-time faculty, and line 9 administration, broken out by race, ethnicity, and gender.

line 10 (3)  Funding and progress of ongoing medical education pipeline line 11 programs, including the UCR/UCLA Thomas Haider Program in line 12 Biomedical Sciences. line 13 (4)  Operating and capital budgets, including detail by funding line 14 source. The operating budget shall include a breakdown of line 15 research activities, instruction costs, administration, and executive line 16 management. line 17 (5)  Efforts to meet the health care delivery needs of California line 18 and the inland empire region of the state, including, but not limited line 19 to, the percentage of clinical placements, graduate medical line 20 education slots, and medical school graduates in primary care line 21 specialties who are providing service within California’s medically line 22 underserved areas and populations. line 23 (6)  A description of faculty research activities, including line 24 information regarding the diversity of doctoral candidates, and line 25 identifying activities that focus on high priority research needs line 26 with respect to addressing California’s medically underserved line 27 areas and populations. line 28 SEC. 17. The absence of language in the Budget Act of 2013 line 29 specifying that the University of California and the Hastings line 30 College of the Law shall use budgeted funds for retirement costs line 31 is not an indication of legislative support for, or acceptance of, line 32 increased retirement costs being paid for by employees of the line 33 University of California and the Hastings College of the Law. line 34 SEC. 18. This act is a bill providing for appropriations related line 35 to the Budget Bill within the meaning of subdivision (e) of Section line 36 12 of Article IV of the California Constitution, has been identified line 37 as related to the budget in the Budget Bill, and shall take effect line 38 immediately. line 39 SECTION 1. It is the intent of the Legislature to enact statutory line 40 changes relating to the Budget Act of 2013.

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line 1 CORRECTIONS: line 2

line 3 Text—Page 23.

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